The world’s biggest smartphone maker, Samsung Electronics, based in South Korea, has sparked calls from shareholders for dividends after it splashed out what was estimated to be $1 billion on an employee bonus.
Apple’s arch rival drew from its nearly $50 billion in cash to mark a 20-year anniversary, just months after it was criticized by shareholders for not spending enough to make its dividend yield higher.
The bonus was to commemorate the New Management strategy of Lee Kun-hee the chairman and hit the operating profit for the October to December quarter, which Samsung said was likely to fall 6% compared to the same period last year, and 18% from the third quarter which was a record $7.8 billion.
Initial estimates on the street put the new bonus at nearly about $650 million, but the extent of the decline in profit reflects a bonus of close to $1 billion. That amounts to a bonus of approximately $4,000 for each of the 240,000 employees.
Because of the bonus, the profit for the fourth quarter is expected to fall below the lowest forecast amongst analysts of 8.8 trillion won, which is the lowest since the second quarter of 2012 when profit was 8.1 trillion won.
Like the majority of companies in South Korea, Samsung has kept a low dividend yield at about 1% or even less, which is the biggest reason its shares are not as valuable as some peers are around the global.
Shares at Samsung experienced their first decline annually during 2013 in over five years due in part to the conservative return policy for shareholders at the company. This came despite operating profit most likely increasing by over 28% to $36.8 trillion won.
Shares were down in Asia on Tuesday by 0.2%, while the broader market was up by 0.3%.
Returns have been around 5.1% of profits, which is the lowest since Samsung purchased back some shares in 2007, when its rate of return has been 15.8%.
Lee took control of Samsung in 1987 from the original founder, his father. In 1993, he ordered his top executives to change everything, with the exception of your wife and children to transform the company from a television set maker to a global leader in technology.
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